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Hero Motors, a company specializing in powertrain solutions for both electric and non-electric vehicles, has withdrawn its draft red herring prospectus (DRHP) for its initial public offering (IPO). The decision, announced on October 5, 2024, comes amidst ongoing market uncertainties, indicating a cautious approach by the company towards entering the public market. Originally filed in August 2024, the IPO aimed to raise Rs 900 crore, with Rs 500 crore earmarked for a fresh issue and the remaining Rs 400 crore for an offer for sale (OFS) from promoters OP Munjal Holdings, Bhagyoday Investments, and Hero Cycles.
The withdrawal of the DRHP is a significant development, particularly considering the company’s strong financial performance. Hero Motors has demonstrated robust revenue growth, increasing from Rs 914 crore in the financial year 2021-22 (FY22) to Rs 1,064 crore in FY24. This positive trajectory is further underscored by a surge in gross profit from Rs 281 crore in FY22 to Rs 419 crore in FY24, achieving a compounded annual growth rate (CAGR) of 22%. The gross margin also saw considerable improvement, growing from 30.78% in FY22 to 39.40% in FY24. This impressive financial performance makes the decision to withdraw the IPO even more intriguing.
The company’s decision to withdraw the DRHP amidst positive financial results underscores the prevailing market uncertainties impacting the IPO landscape. Given the current market volatility and concerns over economic conditions, Hero Motors may be choosing to wait for more favorable conditions before pursuing its public listing. The withdrawal raises questions about the company's future plans and market strategy, especially in light of its strong financial performance. Industry analysts will be closely observing Hero Motors’ next steps and any potential future offerings as the company continues to build its presence in the competitive automotive component market.
Source: Hero Motors withdraws DRHP for Rs 900 crore IPO amid market uncertainties